Estimated time of reading: ~ 3 minutes

The long-awaited tariffs, threatened for months by US President Donald Trump, have finally arrived, immediately putting the global economy and finance in difficulty. The impact of the measures decided by Trump ranges across different areas, calling into question the stability of the global trade system and the value chains created in recent decades. What must certainly be noted is the risk that the White House’s decision could trigger a trade war with no holds barred, which would negatively impact global economic growth and, in particular, that of the European continent, which is struggling to emerge from the effects of the crisis triggered by the war in Ukraine after the previous shock caused by the Covid-19 pandemic. At the moment, while the European Commission has promised heavy retaliation for US tariffs while keeping the door open to a possible negotiation, several EU governments have preached caution for fear of exacerbating the already evident economic consequences of the White House decision. The collapse of stock markets around the world has caused fear and highlighted the interdependence of the global economic system, but the potential continuation of skirmishes between Washington, Brussels and other European capitals could have even more serious effects. What appears certain at the moment is that the imposition of US tariffs on EU products will have far-reaching consequences for the European citizens and the job market. These tariffs, aimed at addressing trade imbalances and protecting the domestic industries in the United States, directly increase the cost of European goods in the US market, making them less competitive and leading to a decrease in exports. This reduction in demand can result in lower production levels in the whole EU – where the industrial output has already shown signs of weakness, especially in Germany. As it already happened during previous crises, the job market in the EU would be particularly vulnerable to these economic shifts. The reduction in exports and economic activity can definitely lead to job losses in various sectors, including manufacturing, automotive, and construction. Taking into account the steel and aluminium tariffs, for instance, there could be a significant impact for those industries that rely on this kind of material, leading to potential job cuts and increased unemployment in many countries. From a general point of view, the uncertainty surrounding tariffs also creates a climate of insecurity for European companies that could potentially lead them to postpone investments in an economic phase where those are deeply needed. European workers in affected industries may thus face financial hardship, leading to a decrease in consumer spending and further economic slowdown in the EU. The US-imposed tariffs also fuel inflation, as the cost of goods increases, affecting the purchasing power of citizens across the bloc and exacerbating economic inequality. Extremist groups and far-right parties already took advantage of such issues in the past years, gaining a large share of votes in crucial elections across the EU and, in some cases, even finding their way to government positions. The support of White House officials like JD Vance and Elon Musk for the European right-wing movement may become even more pressing in a future scenario of economic crisis on the Continent.

Written by: Francesco Marino